A. Problem Analysis

1. What was the problem before the implementation of the initiative?

Inland Revenue Board of Malaysia (IRBM or LHDNM) is the tax collector for direct taxes for the government of Malaysia. Over the last five years, revenue collected by IRBM comprises of 50 to 55% of the total revenue for the nation. Revenue collected will be used to finance the development of Malaysia 0f 30 million people to be a developed nation by year 2020 by eradicating poverty, zero illiteracy by improving the education system, better infrastructure and facilities for well-being and health of its people, upgrade socio-economy and helps increases income per capita of all its citizens.
The general public demands and expects from tax officials to perform their duties with fairness, impartiality and professionalism. To maintain the public’s confidence in the fairness of the tax system and its administration, tax officials need to demonstrate the highest standards of integrity in their dealings with citizens and the community. Lack of integrity costs money, time and most importantly weakens the reputation and credibility of the government. Thus the effect of a low level of integrity in IRBM will undermines the taxpayers’ trust and respect of the organization and adversely affects the fundamental premise behind the concept of voluntary compliance. Active taxpayers comprises of 2.5 million individuals and more than 300,000 corporate.
In the year 2009 (RM88.40 Billion) and 2010 (RM86.50 Billion) there was a drop in tax collection as compared to 2008 (RM90.65 Billion), and the management of IRBM feels strongly among others that there is an urgent need to improve work and integrity culture in the organization. A drop in collection is a major concern for IRBM as it will affect the government fiscal standing for sustainability and to manage and deliver its machinery to the country.
Another problem is the social-cultural factors. These factors influence the management of governance and integrity in the organization in terms of human behavior. Such factors may cause an individual to prioritize between the individual needs and the organizational priorities. IRBM population of 11,000 staffs, called Hasilian, are made up of diverse socio-cultural background like education, health, social requirement, religion and culture. To tackle this issue, require appropriate co-ordination and standardization in procedures and measures for good governance and integrity assurance.
Tone at the top, i.e. buy-in by top management and improve human governance is welcomed. Therefore, instilling wholesome values that are free from corruption, misappropriation and abuse of power across the board must always be strengthened and continuously practiced. It is therefore essential for IRBM to develop and maintain a comprehensive and sustainable integrity policy and practice. This will go a long way in promoting accountability, transparency and integrity in IRBM.

B. Strategic Approach

2. What was the solution?

A holistic management integrity framework is developed called IRBM’s Integrity Plan or IIP, to enable the effective planning, uniformity in implementation, monitoring of integrity and ethics programs or activities in IRBM and the ability to measure the outcome of the integrity program. IIP is comprehensive as it focusses on increasing integrity in a two way manner, which are from the supporting level up to management level (bottom-up) and vice versa from management level down to the supporting level (top-down). It covers all activities of IRBM encompassing management, core functions, services and customer management including service delivery at all level of Department/ Division/ State/ Branch/ Investigation Branch to the general public.
In a nutshell, IIP is a blue print of a structured action plans to implement programs/activities to achieve integrity objectives. Figure 1 and Figure 2 (version 2) shows the PIL book.

3. How did the initiative solve the problem and improve people’s lives?

IIP has been developed in 2009 to manifest the management determination and commitment to preserve and maintain the trust and confidence of the public towards IRBM as a leading tax administrator with integrity. IIP underwent an active phase of implementation covering the years 2009 to 2013. Throughout the implementation episode, the commitment and spirit of the Implementing Agencies (include Department, Division, States, Branches and Investigation Branches) in making IIP a reality proved to be exciting. Throughout the five years of implementing IIP, various programs and initiatives were successfully coordinated and conducted in-line with the objectives of IIP. This is evidenced in the assessment report which is monitored annually. The results comprehensively highlighted the significance of IIP in planning approaches to produce professional human capital that is positive, responsible and with integrity, as well as demonstrate excellent service delivery to the customers.
The objectives of IIP are:
a. To generate, strengthen and maintain cultivation of wholesome values and ethics by all employees;
b. To practice excellent work culture based on transparency, responsibility and good governance;
c. To prevent unethical behavior such as misappropriation, abuse of power and corruption; and
d. To increase quality of delivery service to the customer.
With the efforts put in place to improve work culture and to give excellent delivery services to the people, IRBM made history in the year 2011 by hitting the 3 digits zone for the first time by collecting RM109 Billion. Increased in collection have benefitted the citizen where the government has introduced the 1 Malaysia People’s Aid (BR1M) in the year 2011. IRBM is given the responsibility to vet and recommend eligible citizens to the Ministry of Finance for approval. This government project is well received where citizens with less than RM3,000 household income per month will be given aids of RM500. In the year 2017, the aid amount has been increased to RM1,200 per household. This has helped the poor and vulnerable of this country and currently more than 5,000,000 million people benefited directly to this project.
Increased in collection denotes a high integrity tax administrator, likewise a drop in collection might give the wrong perception to the general public as to the level of integrity in the organization. Hence, IRBM must put in place all necessary efforts to ensure the right perception on the high value of integrity so that it will increased compliance and subsequently increased the government coffers and eventually will benefit all Malaysians especially the poor with free education and health.
Because IIP is a dynamic initiative, improvements were undertaken based on intensive work and ideas from various angles and entities in IRBM. IIP Implementing Agencies succeeded in producing the best module throughout the input and resolution period. The result is upgrading the IIP model to a new version IIP 2.0 for another five years beginning 2014 to 2018. The rebranding of IIP to IIP 2.0 demonstrates the earnestness and determination of the top management of IRBM in ensuring the sustainability of implementing integrity programs and activities in developing human capital and the organization. IRBM collection has shown tremendous achievement where subsequently we collected RM124 Billion (2012), RM128 Billion (2013) and RM132 (2014) Billion. Indeed, this sound commitment will generate a synergy in realizing the dream and vision of becoming IRBM a Leading Tax Administrator for nation building and subsequently prosperity of her citizen.

C. Execution and Implementation

4. In which ways is the initiative creative and innovative?

IIP is unique as it is a master plan that enables IRBM to strategize and implement action plans with clear targets, objectives, outcomes and charts the progress of the integrity awareness, education, practice and culture of the organization.
The creative approaches are:
(i) Concrete but easy staff integrity assurance mechanisms for all.
(ii) Used different vibrant colors for different strategies in IIP 2.0 for easy remembrance.
(iii) Games simulation and integrity videos for fun learning.
(iv) Encourages Feel Good Integrity corner to all offices.
(v) Quizzes before and ends of Integrity presentation to test understanding.
(vi) Celebrity and personalities deliver integrity topics as crowd puller.
The innovative approaches are:
(i) Cost savings as it is developed in-house by IRBM.
(ii) Buy-in from top management.
(iii) Appoint Integrity Care Officers as Integrity Champion (change agent).
(iv) Ease of reporting through control self-assessment by implementation agencies.
(vii) Integrity awareness posted through IRBM Portal (web-base) under “Integrity”.
(viii) Management Integrity Data System (SPEDi) to monitor integrity issues.
(v) Easy guidelines and instruction for ease of implementation.
(vi) Flexibility and faster feedback through OCS (conferencing) and simple feedback template.
(vii) Constant engagement with other agencies (smart partnership) for best practices.

5. Who implemented the initiative and what is the size of the population affected by this initiative?

The Integrity and Risk Management Department (IRMD) is the agency entrusted with coordinating all programs and activities pertaining to integrity in IRBM. The program is conducted by Departments, states and branches (Implementing Agencies) across the country and they report half yearly to IRMD. Administration of all reports is done by IRMD. Control self-assessment is done by the Implementing Agencies and IRMD monitors the progress and propose recommendations for improvement. Progress report is prepared by IRMD and presented to a special committee called Integrity and Governance Committee chaired by the CEO of IRBM. Assurance on the level of integrity of the organization is also presented to the Board of IRBM periodically.
IIP has been implemented wholly to the 11,000 Hasilians and all benefitted from this initiative. The initiative does not stop at IRBM but also encompasses others in the Malaysian society which include extended employee’s family, CSR with community, taxpayers, tax practitioners, tax agents under the IIP Strategy 6, “To enhance integrity through General Approach”. The General Approach involve the following six components:
a. Family institution;
b. Community;
c. Civil society;
d. Socio-culture institution;
e. Religious institution; and
f. Economic institution
The six components involve the key features below:
a. Building a whole, loving and happy family that prospers on the foundation of good values;
b. Creating a safe and prosperous environment within and outside the family;
c. Improve internalization of continuous learning;
d. Inculcating good values through community/ club activities;
e. Develop social networking between IRBM, external organizations and the public;
f. Reinforce inter cooperation between IRBM, other government agencies and interested NGOs to promote enhancement integrity;
g. Develop knowledgeable, skillful, ethical, responsible employees with integrity;
h. Increase cooperation, mutual understanding and mutual respect between different faiths; and
i. Enhance and streamline taxation management ethics amongst taxpayers and tax agents.

6. How was the strategy implemented and what resources were mobilized?

The framework for implementation was set to be in-line with the IRBM 2009-2013 Corporate Strategic Plan. We also seek technical advice from the Malaysian Institute of Integrity as an oversight who is also the custodian of the national integrity agenda for Malaysia. Programs/activities were defined, customized or changed base on IRBM’s needs at the time to commensurate with IIP strategies. In order to achieve the objective of IRBM’s Integrity Action Plan and especially the organizational vision and mission, improvement were done to IIP programs/activities based on current situations and development was done through workshops and simulations.
IIP is implemented through the following six strategies:
Strategy 1 : To enhance the effectiveness of governance;
Strategy 2 : To enhance effectiveness of service delivery system;
Strategy 3 : To enhance awareness programs against abuse of power, misappropriation and corruption;
Strategy 4 : To enhance administration of a fair system;
Strategy 5 : To enhance management of human resource; and
Strategy 6 : To enhance integrity through the general approach.
All six strategies mentioned here are being implemented, reported across the country by the Departments & Divisions in headquarters, states offices and branches (Implementing Agencies), and once received, Integrity Division, IRMD will analyzed, measured, monitored and report to top management. To ensure the above strategies are implemented effectively, various programs and activities have been planned as listed in IRBM’s Integrity Action Plan (Part 2, IIP 2.0). We appoint Integrity Care Officers as integrity facilitators at all departments and branches level to facilitate on the reporting. Under the governance structure, a Chief Integrity Officer [also the Deputy CEO (Compliance)] was appointed to oversee the matter of integrity.
IRBM will undertake the following four approaches in implementing the programs for each strategy in order to achieve the objective which has been set.
a. Education
Develop and implement planned, comprehensive and effective ethics and integrity training programs to increase knowledge and awareness of IRBM employees with regard to appreciating and cultivating wholesome values.
b. Prevention
Increase the effectiveness of internal control systems to detect and identify weaknesses in work procedure practices and system. This is to prevent any opportunity which may lead to corruption, misappropriation and abuse of power.
c. Strengthening
To ensure employees of IRBM comply with work procedures and systems, code of ethics and client charter. Recognition programs are in place to acknowledge IRBM employees who show high level of integrity, whereas those who do not fully comply will be given guidance.
d. Punitive
To develop effective detection and investigation systems in order to detect unethical actions and practices, and penalize accordingly if found guilty.
With the development of IIP, an effort to inculcate integrity at all levels of employees is more structured, systematic, planned and focused. Based on the six integrity core values and ten secondary core values the Integrity Plan Model of IRBM is developed (see Figure 3). IIP is published as reference for strategies and action plan to all Implementing Agencies. We also gave copies of IIP to our counterpart like Malaysian Institute of Integrity, Malaysian Anti-Corruption Commission and Integrity Unit, Ministry of Finance Malaysia. IIP is developed in-house by IRBM officials and the direct cost is printing the IIP’s book of 200 copies which come out to about RM10,000. Other financial implication is for formal training which is allocated yearly. IRBM finance the project.

7. Who were the stakeholders involved in the design of the initiative and in its implementation?

The Integrity Division, Integrity and Risk Management Department, IRBM is the owner of IIP. Workshops were done with the Malaysian Institute of Integrity (IIM) for technical assistant in ensuring IIP it is developed in a systematic and holistic manner. Technical advice was also seek from The Malaysian Anti-Corruption Commission in matters pertaining to abuse, misappropriation of powers and corruption. Selected IRBM employees (focus group), under the purview of IRMD, who undertakes to develop IIP were send to numerous courses and training sessions with the Malaysian Institute of Integrity, the Malaysian Anti-Corruption Academy, Malaysian Institute of Internal Audits and Malaysian Institute of Corporate Governance especially in the area of integrity, accountability, transparency, internal control, risk management and good governance.
A working committee was formed in 2009 to develop IIP (2009 – 2013) which comes from key departments like human resource, legal, corporate affairs, investigation and integrity and also representative from the Malaysian Institute of Integrity. Many workshops were done to ensure all objectives, strategies and action plans met the standards. IIP was approved by the Chairman of The Board who is also the Chief Finance Secretary, Ministry of Finance Malaysia. IIP was launched in the December 2009 by the Second Minister of Finance. IRBM is an agency under the Ministry of Finance. In December 2014, the new version IIP 2.0 (2014 – 2018) was launched by the President of the Malaysian Institute of Integrity who represented the Minister in The Prime Minister’s Department holding the portfolio Integrity and Governance. See Figure 4 and 5 below on the launching of the IIP by our stakeholders.

8. What were the most successful outputs and why was the initiative effective?

The initiative was effective based on the following outputs:
(i) Effective monitoring system
Management Integrity Data System (SPEDi) (see Figure 6) is developed to monitor the integrity issues of each individual staff at all level. Report is generated according to frequency and type of issues, which branch, what year of occurrence and current status of individual case.
(ii) High regards by external parties
The presence of esteemed speakers at IRBM’s yearly Integrity Convention/ Integrity Day:
a. DYMM Raja Nazrin Shah (Now Sultan 0f Perak and Deputy King of Malaysia)
b. DYMM Sultan Muhammad V, Sultan of Kelantan (now the King of Malaysia)
c. Ybhg. Tan Sri Abu Kassim, Chief Commissioner Malaysian Anti-Corruption Commission
d. Ybhg. Dato’ Dr Mohd Tap Salleh, President Institute Integrity Malaysia
e. Ybhg. Tan Sri Megat Najmuddin Megat Khas, President Malaysian Institute of Corporate Governance
To quote Ybhg Tan Sri Abu Kassim, during the signing ceremony of the IRBM Corporate Integrity Pledge 2013:
“MACC is proud that IRBM is committed in enhancing integrity and combating corruption as well as being supportive of anti-corruption initiatives implemented by the Government and MACC. The IRBM increased in collection denotes high integrity in IRBM”.
(iii) Benchmarking by external agencies and sharing of knowledge
Benchmarking was done by Malaysian Head of Registrar Office, Federal Court and University Technology Mara Malaysia in 2015. Deliver the topic Safeguarding Integrity in Tax Administration to international delegates at the CATA Technical Conference 2015. Deliver topic on Work Ethics and Integrity: IRBM Perspective to international participants during the Malaysian Tax Academy international courses and local seminar organized by Malaysian Association of Tax Accountant.
(iv) Good overall integrity performance of IRBM
From the date of implementation of Values Audit Evaluation System, there is a mark increase in index score. IRBM Composite Index Values Rating are 69.27 (2011), 80.35 (2012), 80.13 (2013) and 88.09 (2014) where the Index Score of 80-89 is good. The report generated is also submitted to Malaysian Anti-Corruption Commission and INTEGRITY.
(v) Excellent international evaluation
IRBM were assessed in the year 2015 and scored excellent (see Figure 7) in four areas under Transparency and Accountability by TADAT (Tax Administration Diagnostic Assessment Tools), an organization comprising IMF, World Bank etc. In-placed a strong:
a. Independent external oversight of IRBM.
b. Adequate internal controls to protect the system administration from error and fraud.
c. Level of assurance provided by internal audit.
d. Staff integrity assurance mechanisms.

9. What were the main obstacles encountered and how were they overcome?

Problems were encountered during the implementation and these were overcome as described below:
(i) Commitment, mindset change and acceptance
Commitment, mindset change, acceptance and ownership were main problems as indicated by delay in feedback on action plans implementation from some of the implementing agencies. There were needs for monitoring (phone calls, emails, face to face discussions and reminders) to implementing agencies to ensure timely feedback. There were cases of feedback beyond the stipulated deadlines. These problems were addressed and overcome by activities that include integrity talks, advisory, discussions and annual Integrity Convention program to guide implementing agencies. Role of the management, officers and the Integrity Care Officers were synergized to achieving the objectives of the initiatives. Motivating and rewarding performance of implementing agencies were undertaken through award of certificates of excellence to achievers who scored beyond 91.00% for implementing their action plans. This initiative was successful for instance in 2012, 53.85% implementing agencies received “Excellent” certificate awards compared to 2011 (17.65%) or 32.94% (2010).
(ii) Integrity training
There was limited integrity training of IIP initiatives initially. This was overcome and addressed by the IRBM administrative circular in 2012 for integrity training policy. This initiative was a collaboration with the training arm of IRBM; the Malaysian Tax Academy and the Human Resource Department. Implementing agencies were committed to integrity training in their respective Department/Region/Branch/Investigation Branch. Integrity training medium were enhanced including the production of integrity videos in 2013 (titled Curang) and 2014 (titled Diam) using in-house talent. Improvements were undertaken for integrity training module as seen by the enhanced Integrity Training Module; Part I (Integrity Enculturation) was attended by IRBM Integrity Care Officers in March 28 to April 2016. This enhancement is ongoing in 2017 for Part II (Financial Management and Procurement) and Part III (Human Management and Integrity Communication).

D. Impact and Sustainability

10. What were the key benefits resulting from this initiative?

As a direct tax revenue collector for the Malaysian Government, the Inland Revenue Board of Malaysia (IRBM) practices good governance and integrity to ensure that the stakeholder’s interest is safeguarded and that quality services are delivered to taxpayers and clients/customers. The outcome is measured by IRBM’s KPI which is the tax collection. The IRBM Integrity Plan (IIP) innovation gives a clear impact on integrity assurance in service delivery and this impact is measured by an eco-system of good governance, fairness, trust, and integrity culture as follows:
(i) Governance and integrity
The IRBM has practiced enhanced good governance as pillars are based on principles focusing on the organization’s purpose and on outcomes for the taxpayers and the clients/customers, performing its functions and roles effectively, promoting core values, managing risk, enhancing human governance, engaging stakeholders and making accountability transparent. The IRBM core value identified as HASIL comprise of six core values namely happy, teamwork, professionalism, integrity and excellence. Letter of Undertaking, confidentiality and inclusiveness of circulars has impacted on principles and norms in the daily operations and quality of officers are of high integrity professionals.
(ii) Management of integrity issues
IRBM has improved management of integrity issues that influences outcome of its operations and management functions. Internal monitoring functions within the organization (for example the function of the IRBM Integrity and Governance Committee), the whistleblower policy as a channel for integrity complaints against officers, and the IRBM code of work ethics, to name a few, are examples of integrity management mechanisms designed to facilitate integrity compliance. Procedures for reporting and investigating integrity incidences including internal grievances are in place.
(iii) Public perception and trust
IRBM has provided the public an access to the IRBM Chief Integrity Officer’s telephone number, mailing address and email address for the public to report instances of inappropriate behavior by tax officials or to forward integrity complaints against tax officials. The IRBM taxpayer charter is in place to articulate the rights and obligations of taxpayer and to promote greater transparency and accountability in the IRBM operations. The “Integrity” email (see figure 8) developed in-house facilitates the public in channeling complaints/raising integrity concern against IRBM officer, misconduct, misappropriation and corruption and thus a more efficient channel for customer’s feedback is in place. The management of IRBM sets clear organizational purpose, set objectives and communicate this purpose to guide people’s actions and decisions in providing good quality service and preserving integrity and public trust in IRBM.
(iv) Integrity Culture
Integrity awareness is upheld by the IRBM Competency Model (see Figure 9) where integrity is placed at the “meta level”, creating awareness and the practice of ethics and integrity. Control structure for external audit and internal audit enable improvements for compliance with operational procedures and expenditure/use of funds/assets that enables the achievement of organizational objectives, prudent financial management and risk management. High Integrity and ethical organizational culture has been achieved by IRBM practice of IRBM’s Pledge, Corporate Song, Corporate Integrity Pledge (see Figure 10) and Corruption Free Pledge (see Figure 11).

11. Did the initiative improve integrity and/or accountability in public service? (If applicable)

The IRBM Integrity Plans (IIP) action plans have contributed to improvement of organizational integrity and/or diminish corruption thus accountability in public service. It has made it easier for people to hold the government accountable on the delivery of public service as follows:
(i) Transparent
The IRBM is transparent in that the No Gift/Hospitality Policy banner (see Figure 11) at IRBM service counters (since 2015) is a clear statement that IRBM does not accept gifts / favor/ hospitality in delivering its service. Improved integrity is mutual as the public is thus duly advised not to be the giver of gifts in transacting their tax matters with IRBM.
(ii) Reporting
The IRBM Whistle Blower Circular 2015 safe guarded integrity as it is a channel to receive complaints against IRBM officer’s misconduct, misappropriation or corruption. Currently, there are no complaints recorded under this circular.
(iii) Investigation
Internal Standard of Practice in conducting investigation of IRBM integrity complaints cases introduced since 2016 encourages more efficient complaint case investigation. It facilitates and expedites solving integrity complaint cases by the Special Committee for Integrity Complaint Against IRBM Officer.
(iv) Integrity Complaint
Administrative Circular regarding the function of the IRBM Special Committee for Integrity Complaint against IRBM Officer revamped in 2016 helps enhance the management of integrity complaint cases. It is streamlined with the changes in IRBM organizational structure and functions. Statistics for corruption cases (if any) are profiled from complaints cases under “SPEDi” system since 2015. Currently, there is no corruption case charged to any IRBM’s employee.
(v) Integrity and Governance
The IRBM Chief Executive Officer chairs the IRBM Integrity and Governance Committee meetings conducted 3 times annually since 2015. Among the Term of Reference of this forum is Ethics and Nobel Values. Improved integrity is in faster decision making for solving integrity and governance matters by IRBM management for service delivery.
(vi) Value Audit
The IRBM Value Audit Management System is a consistent assurance for value practice of IRBM since 2009. The customer feedback instrument is one of the five instruments that forms the element of the composite index of value practice. Favorable internal customer satisfaction feedback score at 94.23 points (i.e. rank “Excellent”) had contributed to the value practice composite index of 84.51 points (i.e. ranked “Good”) for IRBM Headquarters in 2015.

12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)

most vulnerable?
Malaysia is a developing country and the workforce of the nation comprise of more than 50% are female. Women currently hold about 30% of top management position and ministerial post. It appears that the Malaysian women have a pivotal role for national development. Women and girls in this country have the freedom and social standing. Nevertheless women and girl’s rights and virtues are being safeguarded by the existing laws and regulations. Understanding the vulnerabilities of this gender, the government allocated adequate budget to the Ministry of Women, Family and Community Development and the Secretariat for Women’s Affairs in the Prime Minister’s Department which cater specially for women to lend support and finance their activities i.e. to ensure this group are well taken care-off socially and spiritually.
Under Strategy 6 of the IIP, programs in the action plans are extended to family and doing CSR activities. In the long run, effective implementation of the mechanisms put in place in the IIP’s objectives and strategies shall benefits all as IRBM is the main agent to collect revenue for the nation. High collection denotes high integrity tax administrator.